The "Doughnut Hole"

Many people have asked me to explain the Medicare Doughnut Hole. With the Medicare Part D drug plan every patient has a $250 deductible. This means that the patient has to pay the first $250 for their drugs.

The next $2000 dollars of drugs, Medicare will pay 75 percent of the cost. This means the government will pay $1500 of the $2000 worth of drugs and the patient will be responsible for the other 500 dollars.

So out of the initial $2250 dollars worth of drugs, the patient pays $750 and the government pays 1500 dollars.

At this point, the government benefit plan will not pay another penny until the patient has actually spent $3600 in total drug expenses out of their own pocket. At the point that the total drug cost hits $5100 ($3600 patient has paid plus $1500 Medicare paid) the government will now pay up to 95% of any further expenses.

The doughnut hole is that portion between $2250 and $5100 that the patient is totally responsible for.

Several companies do offer additional insurance that will cover this gap, but it comes with additional monthly premiums.

Which plan a patient chooses should be individualized based on their needs, finances, current drug costs and risks they want to take.